Steel: European Commission adjusts safeguard measures against US steel import tariffs, September 2002

In the latest development in the ongoing EU-US trade dispute over US steel import tariffs, the European Commission decided on 27 September 2002 to limit safeguard measures to seven out of the original twenty one products which fulfill the WTO requirements and to postpone the implementation of such measures until after the outcome of the WTO dispute panel. The measures are intended to protect the EU market from the expected surge in steel imports, due to the introduction of tariffs by the United States.

The trade dispute over steel has been raging between the European Union and the United States since 5 March 2002 when the US government decided to impose tariffs on US steel imports in order to protect the ailing American steel industry. The world steel market is increasingly overcapacitated and with the United States slow to introduce the necessary restructuring measures one of its largest industrial sectors has faced serious financial difficulty with more than 30 US steel producers declaring themselves bankrupt over the last four years. According to the US International Trade Commission (ITC), the problems facing the industry have been exacerbated by a flood of cheap imports from foreign producers during the cause of 2001. In order to protect the industry from such competition the ITC recommended that the US administration should introduce import tariffs for steel.

The US government's decision to impose steel import tariffs provoked outrage around the world with countries such as Japan, Korea, China, Switzerland and Norway joining the European Union in lodging a formal complaint with the World Trade Organisation. Pending the outcome of the WTO dispute panel, the European Commission announced that it would take all necessary measures to defend European interests including the use of retaliatory tariffs.

In March 2002, the European Commission adopted provisional safeguard measures on 15 steel products, while at the same time opening an investigation into a total of 21 steel products. On 27 September 2002, it concluded that imports of only 7 of these 21 products have increased to such an extent as to cause serious damage to the EU steel industry. Imports of three other products will continue to be monitored until the start of 2003. The European Union had itself a deadline of September 30 2002 to decide whether to impose trade sanctions worth up to €379m but in another move the European Commission has recommended to the Council of Foreign ministers that the EU should postpone imposing retaliatory tariffs until the WTO ruling which is expected in March 2003. If the US fails to withdraw the import tariffs within five days of the ruling then the Council has already decided that countermeasures of €2.3b will be immediately applied.

So far the European Commission's method of levying pressure on its US counterparts to lift the tariffs has met with some success - since June the US has exempted a total of 727 products. By deciding to postpone imposing safeguard measures the European Commission is clearly hoping for more exemptions in the future, 'Our strategy of not applying sanctions and of pushing the US to grant exemptions to our steel makers has been successful', said the spokeswoman for European Commissioner for Trade, Pascal Lamy. Indeed, the decision by the European Union to await the WTO ruling should prevent the dispute escalating into a full blown trade war.

Links:

European Commission:
	27.09.02:	European Commission adapts steel safeguard safety net [IP/02/1387]
	23.08.02:	Commission welcomes partial withdrawal of WTO illegal US steel protective measures [IP/02/1234]
	01.08.02:	US loses another two WTO steel panels [IP/02/1185]
	DG Trade: Steel sector
United States Trade Representative:
	Homepage
	Steel sector
	12.08.02:	Department of commerce and USTR announces further set of products to be excluded from safeguard on steel products
BBC News On-Line:
	26.09.02:	Europe backs down in steel war
	09.09.02:	US 'to push new steel deal'
	28.08.02:	Europe welcomes US steel vote
	23.08.02:	US steel backtrack fails to satisfy EU
	23.08.02:	US announces steel war exemptions
	23.07.02:	US steel giant sees trade war gains
The European Policy Centre:
	Homepage
	Challenge Europe: EU-US Economic Disputes: There is More to Trade than Goods and Services
Standard and Poors:
	Homepage
	U.S. Steel Tariffs: Who Gains, Who Loses, and at What Price?
European Sources Online: Financial Times:
	26.09.02:	Brussels halts action in US steel dispute
European Sources Online: Financial Times:
	17.09.02:	Trade panel set up to hear US steel complaint
	14.09.02:	EU industry tries to limit sanctions fallout
	10.09.02:	US seeks worldwide end to most steel sector subsidies
	07.09.02:	EU eyes list of $4 billion US sanctions
	02.09.02:	EU-US trade dispute enters delicate phase
	24.08.02:	Commission pledges to press on with WTO case over steel
European Sources Online: Topic Guides:
	24.08.02:	The European Union and the United States
European Sources Online: In Focus:
	23.07.02:	EU foreign ministers postpone retaliation against US steel tariffs
	11.06.02:	EU foreign ministers back European Commission proposal to retaliate against US steel import tariffs, June 2002

Helen Bower
Compiled: Monday, 30 September 2002

In the latest development in the ongoing EU-US trade dispute over US steel import tariffs, the European Commission decided on 27 September 2002 to limit safeguard measures to seven out of the original twenty one products which fulfil the WTO requirements and to postpone the implementation of such measures until after the outcome of the WTO dispute panel.